What is APRA's 3% serviceability buffer?

Australian lenders must assess your loan using your interest rate plus a 3% buffer (formerly 2.5%, raised in October 2021). It's a stress test — if you can afford repayments at the higher rate, you're considered able to absorb future rate rises.

What is HEM and why does it matter?

The Household Expenditure Measure is a benchmark of typical living costs by household size, location and income band, published by the Melbourne Institute. Lenders use the higher of HEM or your declared expenses, so over-stating frugality won't lift your borrowing power.

Why does my borrowing power vary by lender?

Each lender has its own income shading rules (rent, bonus, overtime, dividend treatment), expense floors, debt-to-income caps, and credit-card limit assumptions. The same applicant can see borrowing capacity vary by $100k+ across the panel.

Is this calculator the figure a bank will lend me?

No. It's a directional estimate using APRA's framework. The actual approved amount depends on the specific lender's serviceability calculator, your credit profile, deposit, employment status, and the property itself.

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Borrowing power calculator

An indicative maximum loan estimate based on your income, expenses and existing debts. Uses the APRA 3% serviceability buffer and HEM expense floor every Australian lender applies.

Your annual income (gross)$

Pre-tax salary, including superannuation? Use base salary excluding super for accuracy.

Partner's annual income (gross)$

Set to 0 if you're applying solo.

Dependants

Children or financially dependent adults.

Monthly living expenses$

Rent (if applicable), groceries, utilities, transport, insurance, subscriptions.

Monthly debt repayments$

Car loan, personal loan, HECS-HELP minimums.

Credit card limits (total)$

Lenders count 3.8%/month of your card limits as servicing — cancel unused cards before applying.

Variable rate% p.a.

Today's lowest variable: 5.59%.

Loan term yr

Use 30 years for max servicing capacity.

Indicative max loan: $554,000

Indicative maximum loan

$554,000

Conservative ballpark — every lender's policy differs

Monthly repayment at displayed rate

$3,178

At 5.59% over 30 years

Monthly repayment at assessment rate

$4,297

At 8.59% (APRA 3% buffer)

Net monthly income

$7,001

After tax + Medicare levy

Monthly affordability

$4,297

Net income minus all expenses + debts + card servicing

How this is calculated

We compute your net monthly income (after PAYG tax + Medicare levy) and subtract: HEM expense floor (or your declared expenses, whichever is higher), your existing monthly debt repayments, and 3.8% of your total credit card limits per month (the rate APRA requires lenders to use). The remainder is your "monthly affordability" — that's what we solve back into a maximum loan, using a stress-test rate of your displayed rate + 3% (the APRA serviceability buffer).

Why your real number may be higher: some lenders allow shading down on HEM in higher income bands, treat negatively-geared investment expenses differently, and have different rules for partner income, bonuses, commission, and self-employed applicants. A broker can run your scenario across 85+ lenders to find the highest-servicing policy.

Want a real number, not a ballpark?

These figures are estimates. A 30-min broker consult will run your specific scenario against the actual lender policies — no fees, no obligation.

Talk to a broker

Important: This calculator provides an estimate only and does not constitute credit advice. Actual rates, repayments, fees and approval are subject to lender policy and your individual circumstances. Comparison rates are based on a $150,000 loan over 25 years on a secured basis — see footer for the full disclaimer.